The features of the political environment oideology

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The features of the political environment oIdeology: set of values and beliefs which justify certain behaviours and guides economic and political actions oPolitical-economic systems oRegulations An important part of the political environment is the dominant ideology. oThe systematic and integrated body of constructs, theories and aims that constitute a socio-political program. oIn western society, there are three main ideological traditions: Conservatism: support for tradition, country, authority, dutry and hierarchy. Individuals seek security and identity in a stable and orderly society Liberalism: importance of individual over the group Socialism: priorities of social equality, the common good above the demands of the self-centred indivudal and the dependence of the individual in the larget society. Political systems referlect a particular mix of values drawn from one more of these. oIn general, MNCs will be more comfortable operating in a political environment similar to that of their home country. Most modern societies are pluralistic i.e. different ideologies coexist within the society because there is no one ideology accepted by all. The two extremes in a theoretical sense are democracy and totalitarianism. oDemocracy - allows for the involvement of citizens in the decision making process usually through a system of representation. Political system where government is by the people, exercised either directly or through elected representatives oTotalitarianism - single party, individual or group monopolises political power and neither recognises nor permits opposition Political system where one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties. Downloaded by Jin .Y ([email protected])lOMoARcPSD|4182995
2_______________________________________________________________________________________ Jessica King BSB119 – Global Business 07187696 LECTURE 6: TRADE AND INVESTMENT Political Risk Political risk is the likelihood that the foreign investment of a business will be constrained by a host government's policies. Adverse actions that affect the operating conditions of MNCs include war, insurrection or political violence oThey also include more subtle changes: in government attitudes and policies that affect the behaviour, ownership, physical assets, personnel or operations of the firm Khambata and Ajami (1992, pp. 285-290) group the factors that affect political risk into two categories: inherent risk (constantly present around the world) and circumstantial risk (that arises out of particular events in different countries). You should make sure that you understand the factors considered in each of these categories. oInherent risk (constantly present around the world) oCircumstantial risk (that arises out of particular events in different countries).

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